No. 17-515

In the Supreme Court of the United States

CNH INDUSTRIAL N.V. & CNH INDUSTRIALAMERICA, LLC,

Petitioners,

v.

JACK REESE; FRANCES ELAINE PIPPE; JAMESCICHANOFSKY; ROGER MILLER; GEORGE NOWLIN,

Respondents.

On Petition for a Writ of Certiorari to theUnited States Court of Appeals

for the Sixth Circuit

MOTION FOR LEAVE TO FILE BRIEF AMICUS CURIAEAND BRIEF AMICUS CURIAE FOR WHIRLPOOLCORPORATION IN SUPPORT OF PETITIONERS

STEPHEN M. SHAPIRO

Counsel of RecordTIMOTHY S. BISHOP

JOSHUA D. YOUNT

MICHAEL A. SCODRO

Mayer Brown LLP71 South Wacker DriveChicago, Illinois 60606(312) 782-0600sshapiro@mayerbrown.com

Counsel for Amicus Curiae

MOTION OF WHIRLPOOL CORPORATION FORLEAVE TO FILE BRIEF AMICUS CURIAE IN

SUPPORT OF PETITIONERS

Amicus Whirlpool Corporation respectfully movespursuant to Rule 37.2 of the Rules of this Court forleave to file a brief amicus curiae in support ofpetitioners. Petitioners have consented to the filing ofthis brief, and their consent is on file with the Clerk.Respondent does not consent to this filing.

Whirlpool Corporation is a leading global manu-facturer of home appliances, employing more than20,000 people in the United States. Whirlpool hassubstantial operations in the Sixth Circuit, includingits headquarters in Michigan and large manufacturingoperations in Ohio and Tennessee, as well as in othercircuits. Whirlpool therefore has a powerful interest inthe Sixth Circuit following this Court’s precedentsregarding the vesting of retiree healthcare benefits, seeM&G Polymers USA v. Tackett, 135 S.Ct. 926 (2015),and in resolving the circuit split that has resulted fromthe Sixth Circuit’s failure to do so. Further confusingthe legal rules applicable to corporations like Whirlpoolthat do business in the Sixth Circuit, that court ofappeals has developed competing and irreconcilablelines of authority addressing the vesting of retireehealthcare benefits, which the court has been unable toresolve en banc.

The question presented in the petition is ofimmediate and concrete importance to Whirlpool.Whirlpool is a defendant in protracted and costlyretiree healthcare benefits litigation in the NorthernDistrict of Ohio. That case has been litigated in thedistrict court for six years, culminating in a decisionvesting retiree healthcare benefits that would not havebeen held vested in any other circuit in the Nation. SeeZino v. Whirlpool Corp., No. 11-CV-1676, 2017 WL3219830 (N.D. Ohio July 27, 2017). Whirlpool has

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appealed that erroneous decision. Nos. 17-3851/3860(6th Cir.).

Whirlpool also possesses a practical understandingof the effect of the Sixth Circuit’s vesting rule ascompared to the contrary rule applied in other circuits.Whirlpool has litigated the same healthcare-vestingquestion in the Eighth Circuit, which—unlike theSixth Circuit—is in step with this Court’s precedent.See Maytag Corp. v. UAW, 687 F.3d 1076 (8th Cir.2012). Whirlpool understands the realities of thesecompeting rules and has a strong interest inadvocating a uniform nationwide standard thatconforms with this Court’s Tackett decision.

For these reasons, Whirlpool believes that itsperspective on the importance of the issues raised bythe petition will assist the Court in its consideration ofthis case.

Respectfully submitted.

STEPHEN M. SHAPIRO

Counsel of RecordTIMOTHY S. BISHOP

JOSHUA D. YOUNT

MICHAEL A. SCODRO

Mayer Brown LLP71 South Wacker DriveChicago, Illinois 60606(312) 782-0600

sshapiro@mayerbrown.com

Counsel for Amicus Curiae

NOVEMBER 2017

i

TABLE OF CONTENTS

Page

INTEREST OF THE AMICUS CURIAE....................1

STATEMENT ..............................................................1

ARGUMENT ...............................................................3

I. The Ruling Below Conflicts SquarelyWith This Court’s Decision In Tackett. .................3

II. The Circuits Are Split Over TheQuestion Presented And The SixthCircuit Is Internally Divided. ................................8

A. There Is An Entrenched And MatureSplit Among The Federal Courts OfAppeals..............................................................8

B. The Sixth Circuit Is Internally Divided,Without The Usual Remedy Of En BancReview.............................................................12

III.This Case Presents An Issue OfExceptional Importance.......................................17

CONCLUSION ..........................................................22

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Alexander v. Sandoval,532 U.S. 275 (2001)................................................7

Barton v. Constellium Rolled Prods.-Ravenswood, LLC,856 F.3d 348 (4th Cir. 2017)................................11

Chi. & N.W. Ry. Co. v. United Transp.Union,402 U.S. 570 (1971)..............................................18

Cole v. Meritor, Inc.,855 F.3d 695 (6th Cir. 2017)....................14, 15, 16

Conkright v. Frommert,559 U.S. 506 (2010)........................................12, 17

Curtiss-Wright Corp. v. Schoonejongen,514 U.S. 73 (1995)................................................17

Dickinson v. Petroleum Conversion Corp.,338 U.S. 507 (1950)..............................................12

Gallo v. Moen Inc.,813 F.3d 265 (6th Cir. 2016)..............13, 14, 15, 16

Grove v. Johnson Controls, Inc.,2017 WL 2590762 (3d Cir. June 15,2017) (unpublished op.) .................................10, 11

iii

Harper Woods Retirees Ass’n v. City ofHarper Woods,879 N.W.2d 897 (Mich. Ct. App. 2015)................22

Inter-Modal Rail Employees Ass’n v.Atchison, Topeka & Santa Fe Ry. Co.,520 U.S. 510 (1997)..............................................20

Inyo Cty. v. Paiute-Shoshone Indians,538 U.S. 701 (2003)..............................................12

Kendzierski v. Macomb County,901 N.W.2d 111 (Mich. Ct. App. 2017)................22

M&G Polymers USA v. Tackett,135 S.Ct. 926 (2015)..................................... passim

Maryland v. Wilson,519 U.S. 408 (1997)................................................7

Maytag Corp. v. UAW,687 F.3d 1076 (8th Cir. 2012)........................11, 12

Metro. Edison Co. v. NLRB,460 U.S. 693 (2003)................................................4

Moore v. Metro. Life Ins. Co.,856 F.2d 488 (2d Cir. 1988) ...............17, 19, 20, 21

Nat’l Fed’n of Indep. Bus. v. Sebelius,567 U.S. 519 (2012)..............................................19

Nichols v. Alcatel USA, Inc.,532 F.3d 364 (5th Cir. 2008)..................................8

iv

Oakley v. Remy Int’l, Inc.,2010 WL 503125 (M.D. Tenn. Feb. 5,2010) .....................................................................11

Reese v. CNH America LLC,574 F.3d 315 (6th Cir. 2009) (Reese I) .................12

Reese v. CNH America LLC,694 F.3d 681 (6th Cir. 2012) (Reese II)..................2

Reese v. CNH Indus. N.V.,854 F.3d 877 (6th Cir. 2017) (Reese III) ...... passim

Senn v. United Dominion Industries, Inc.,951 F.2d 806 (7th Cir. 1992)............................9, 10

Serafino v. City of Hamtramck,2017 WL 3833206 (6th Cir. Sept. 1,2017) .....................................................................16

Sprague v. General Motors Corp.,133 F.3d 388 (6th Cir. 1998) (en banc)..................4

U.S. Bancorp Mortg. Co. v. Bonner MallP’ship,513 U.S. 18 (1994)................................................13

UAW v. Gen. Motors Corp.,497 F.3d 615 (6th Cir. 2007)................................20

UAW v. Kelsey-Hayes Co.,854 F.3d 862 (6th Cir. 2017)..............14, 15, 16, 19

UAW v. Kelsey-Hayes Co.,872 F.3d 388 (6th Cir. 2017)..........................15, 16

v

UAW v. Skinner Engine Co.,188 F.3d 130 (3d Cir. 1999) .................................10

UAW v. Yard-Man, Inc.,716 F.2d 1476 (1983)................................2, 3, 5, 18

Varsic v. U.S. Dist. Ct. for the C. D. of Cal.,607 F.2d 245 (9th Cir. 1979)................................11

Statutes

29 U.S.C. §1102(a)(1) ................................................17

29 U.S.C. §1132(e)(2).................................................11

U. S. Sup. Ct. Rule 37.6 ..............................................1

Other Authorities

3 A. Corbin, CORBIN ON CONTRACTS (1960) ................3

Flint Manager Warns of Bankruptcy OverRetiree Costs, Bloomberg News (July 17,2014) .....................................................................21

Chris Isidore, Delphi Actions CouldBankrupt GM, CNNMoney.com(Mar. 31, 2006) .....................................................21

Steve Miller, Full Text of Remarks byDelphi’s Steve Miller, FINANCIAL TIMES

(Oct. 10, 2005) ......................................................20

Phillip Moderson, Following a DangerousPrecedent: The California Rule and theKansas Pension Crisis, 64 U. KAN. L.REV. 1113 (2016) ..................................................21

vi

Tricia Neuman & Anthony Damico, FadingFast: Fewer Seniors Have Retiree HealthInsurance (May 15, 2016) ....................................19

Now for the Reckoning, THE ECONOMIST

(Oct. 13, 2005) ......................................................20

Responsible Retirement Reform for LocalGovernment Task Force, Report ofFindings and Recommendations forAction (July 2017) ................................................22

Alan Reuther, By Saving Billions in RetireeHealth & Pension Benefits, AutoBailouts Were an Even Bigger SuccessThan Acknowledged, Economic PolicyInstitute (Mar. 12, 2015) .....................................20

Stephen M. Shaprio, et al., SUPREME COURT

PRACTICE (10th ed. 2013) .....................................13

INTEREST OF THE AMICUS CURIAE

The interest of the amicus is set forth in theforegoing motion for leave to file this amicus brief.1

STATEMENT

The petition asks the Court to resolve anentrenched split in authority over the proper legal rulefor interpreting healthcare benefit provisions incollective bargaining agreements (“CBAs”). This caseprovides an appropriate vehicle for resolving thematter, for the CBA between petitioners (collectively“CNH”) and the union that represented respondentretirees is similar in many respects to contracts ineffect throughout the country. The question presentedis whether these ubiquitous types of contract termsrequire employers to pay healthcare benefits for thelife of every retiree, even after the contract expires.

CNH entered into the CBA at issue with theUnited Automobile, Aerospace, and AgriculturalWorkers of America in 1998. Reese v. CNH Indus. N.V.,854 F.3d 877, 879 (6th Cir. 2017) (“Reese III”). As iscommon, that CBA offers healthcare benefits forretirees and spouses entitled to receive a pension:“Employees who retire under that * * * Pension Plan* * * after 7/1/94, or their surviving spouses eligible toreceive a spouse’s pension under the provisions of thePlan, shall be eligible for the Group benefits asdescribed in the following paragraphs.” Ibid. By itsterms, the CBA expired on May 2, 2004. Pet. App. 115.

1 Pursuant to Rule 37.6, amicus affirms that no counsel for a partyauthored this brief in whole or in part and that no person otherthan amicus and its counsel made a monetary contribution to itspreparation or submission.

2

Respondents are former employees who retiredbetween 1994 and 2004 and their spouses. Reese III,854 F.3d at 879. They filed suit against CNH in theU.S. District Court for the Eastern District of Michiganin 2004, claiming an entitlement to lifetime healthcarebenefits under the 1998 CBA. Ibid. Thirteen years oflitigation have followed, including three appeals to theSixth Circuit, whose third opinion (Reese III) is thesubject of petitioners’ request for certiorari review.

The panel majority in Reese III recognized that,since its prior decision in Reese II, this Court decidedTackett. Tackett overturned longstanding Sixth Circuitcase law—beginning with UAW v. Yard-Man, Inc., 716F.2d 1476 (1983)—which had adopted unfoundedinferences that retiree healthcare benefits vested forlife. Nonetheless, relying heavily on the four-Justiceconcurrence in Tackett (rather than the five-Justicemajority), the court in Reese III held that the 1998CBA was ambiguous and that extrinsic evidencesuggested an intent to confer benefits on CNHemployees for life. 854 F.3d at 883. Essentially, thecourt revived Yard-Man as an inference of contractualambiguity, instead of a direct inference of vesting,replacing one heavy thumb on the scale with another.

Judge Sutton dissented. He explained that thevesting rules laid out in Tackett “should make quickwork of this case.” 854 F.3d at 888. The durationalclause in the CBA—providing that the contract wouldexpire in 2004—set an end date for “all of the benefitsand burdens of the contract (not otherwise extended orshortened).” Ibid. The CBA offered no alternativeexpiration rule for retiree healthcare benefits, so thedurational clause controlled. Ibid.

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The Sixth Circuit denied petitioners’ request for enbanc review. Judge Sutton would have granted panelrehearing.

ARGUMENT

I. The Ruling Below Conflicts Squarely With ThisCourt’s Decision In Tackett.

1. In Tackett, this Court overruled the SixthCircuit’s Yard-Man rule, which “violate[d] ordinarycontract principles by placing a thumb on the scale infavor of vested retiree benefits in all [CBAs].” 135 S.Ct.at 935. The Sixth Circuit had “refused to apply generaldurational clauses to provisions governing retireebenefits” and instead “require[d] a contract to include aspecific durational clause for retiree healthcarebenefits to prevent vesting.” Id. at 936 (emphasisadded). This approach “distort[ed] the text of theagreement” and defied “the principle of contract lawthat the written agreement is presumed to encompassthe whole agreement of the parties.” Ibid.

Yard-Man was also wrong in holding that health-care benefits vest when a CBA includes terminationdates for some benefits but “no provision specificallyaddress[ing] the duration of retiree healthcarebenefits.” 135 S.Ct. at 934. And it was error to infervesting from a CBA “provision that ties eligibility forretirement-health benefits to eligibility for a pension.”Id. at 935 (internal quotation marks omitted).

In place of these mistaken inferences, Tackettstressed “the traditional principle that courts shouldnot construe ambiguous writings to create lifetimepromises.” Id. at 936 (citing 3 A. Corbin, CORBIN ON

CONTRACTS §553, at 216 (1960)). In this regard, Tackettexplained (135 S.Ct. at 937, emphasis added), Yard-Man erred in departing from the Sixth Circuit’s ownapproach to “noncollectively bargained contracts

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offering retiree benefits” in Sprague v. General MotorsCorp., 133 F.3d 388, 400 (6th Cir. 1998) (en banc).Sprague rightly applied “ordinary principles of contractlaw” to conclude that “‘an employer’s commitment tovest such benefits is not to be inferred lightly’” andtherefore “‘must be found in the plan documents andmust be stated in clear and express language.’”Tackett, 135 S.Ct. at 937. This requirement both tracksblack letter contract principles and adheres to thelabor-law rule that courts may “not infer from ageneral contractual provision that the parties intendedto waive a statutorily protected right unless” thewaiver is “explicitly stated” and “clear andunmistakable.” Metro. Edison Co. v. NLRB, 460 U.S.693, 708 (2003).

Tackett embraced the related “principle that‘contractual obligations will cease, in the ordinarycourse, upon termination of the bargaining agree-ment.’” 135 S.Ct. at 937. That principle means that “‘acollective-bargaining agreement [may] provid[e] inexplicit terms that certain benefits continue after theagreement’s expiration.’” Ibid. “‘But when a contract issilent as to the duration of retiree benefits, a court maynot infer that the parties intended those benefits tovest for life.’” Ibid.

2. The Sixth Circuit’s ruling in Reese III conflictssquarely with Tackett. CNH’s CBA included a generaldurational clause terminating the agreement in 2004.Yet the majority cited the contract’s supposed “silenceas to the parties’ intentions” regarding the duration ofretiree healthcare as a source of ambiguity. 854 F.3d at882. Likewise, the majority found ambiguity in the factthat entitlement to retiree healthcare is tied to pensioneligibility. Ibid. These are inferences that Tackettexpressly prohibits. See 135 S.Ct. at 936-937.

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Nor is there anything to Reese III’s theory thatalthough silence and tying are off limits as grounds toinfer a right to lifetime benefits, these same factorsserve as sources of ambiguity. Tackett requires clearand explicit vesting language, not ambiguity. As JudgeSutton observed in dissent, “[a] forbidden inferencecannot generate a plausible reading” of the CBA. 854F.3d at 891.

The panel’s method of manufacturing ambiguity isflatly inconsistent with Tackett. See supra p. 4; 135S.Ct. at 935, 937. The tying language “has nothing todo with the duration of the healthcare benefits.” ReeseIII, 854 F.3d at 891 (Sutton, J., dissenting). “Theagreement says that pensioners ‘shall be eligible’ forhealthcare benefits for as long as the agreementprovides those benefits—that is, until May 2, 2004—notfor as long as retirees earn a pension.” Ibid.

The panel also relied on the fact that “healthcarecoverage continues past the date of retirement,” unlikeother CBA provisions. 854 F.3d at 882. But that isequally irrelevant. As Judge Sutton explained, thislanguage merely preserves the benefit after anemployee retires. “It does not say that benefitscontinue past the termination date of the agreement,much less that they continue for life.” Id. at 890. Thecontract in Yard-Man included similar provisions, butTackett specifically rejected Yard-Man’s inference ofvested benefits based on this language. 135 S.Ct. at934.

In short, Reese III held that commonplaceprovisions in the 1998 CBA—provisions that Tackettconsidered and rejected as evidence of vesting—rendered the CBA ambiguous. In further violation ofTackett, the panel then found an intent to conferlifetime benefits based on that supposed ambiguity.

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3. The majority in Reese III derives much of itsunderstanding of this Court’s decision in Tackett fromthe Sixth Circuit’s opinion on remand in that case. See854 F.3d at 881-883. But the decision on remand“rel[ied] heavily” not on the five-Justice majority inTackett, but on the four-Justice concurrence. Id. at 882.Reese III relies on the concurrence’s views that “[n]orule requires ‘clear and express’ language in order toshow that parties intended healthcare benefits to vest,”and that employer obligations may be found in“implied terms of the expired agreement.” Id. at 881.And it relied on the concurrence in assigning littleweight to the CBA’s general durational cause and inusing extrinsic evidence to infer a right to vestedhealthcare benefits. Id. at 881-882.

It is impossible to reconcile those principles withthe Court’s opinion in Tackett. This Court madeexplicit that “clear and express language” is required tovest benefits for life in the face of a contract’s generaldurational clause. See 135 S.Ct. at 937 (“‘an employer’scommitment to vest such benefits is not to be inferredlightly’” and “‘must be stated in clear and expresslanguage’”); ibid. (enforcing “the traditional principlethat ‘contractual obligations will cease, in the ordinarycourse, upon termination of the bargainingagreement’”); ibid. (“‘when a contract is silent as to theduration of retiree benefits, a court may not infer thatthe parties intended those benefits to vest for life’”).

As the dissent below explained, the opinion for theCourt in Tackett “should make quick work of this case.”854 F.3d at 888. Petitioners “never promised to providehealthcare benefits for life” in the 1998 CBA, “and theagreement contained a durational clause that limitedall of the benefits and burdens of the contract (nototherwise extended or shortened) to the six-year termof the agreement.” Ibid. Under Tackett, that “would

7

end this case. The durational clause would control, andthe healthcare benefits would last as long as thedurational clause said they would.” Ibid.; see also id. at889 (Sutton, J., dissenting).

Conflicting statements in the Tackett concurrenceare not controlling. See Maryland v. Wilson, 519 U.S.408, 412-413 (1997). The reasoning in a concurrencedoes not become part of the Court’s holding, even if themajority opinion “does not expressly preclude ([and] is‘consistent with’) the concurrence’s approach.”Alexander v. Sandoval, 532 U.S. 275, 285 n.5 (2001).

4. The CBA in Reese even more obviously foreclosesthe vesting of lifetime healthcare benefits than thecontract in Tackett. CNH’s summary plan document forthe 1998-2004 period repeatedly informed allemployees that CNH could amend or terminate thebenefit plan. See Dist. Ct. Doc. 125-19. It provided, inboldface type, that “[a]n amendment or termination ofthe * * * benefit plans may affect not only thecoverages of active employees * * * but also of * * *former employees who retired, died, or otherwiseterminated employment.” Id. at 3; see id. at 5 (same).This warning expressly reserved CNH’s rights tochange or terminate retiree benefits.

Furthermore, prior to the 1998 contract, CNH andits predecessor repeatedly had renegotiated contractswith the UAW, and each new agreement includedlanguage conferring revised healthcare benefits on pastretirees. Reese III, 854 F.3d at 879. The fact that“benefits were reset” in each contract “undermines atheory of vesting because it indicates that they wouldhave to be reset again when this agreement expired.”Id. at 892 (Sutton, J., dissenting). There would be noneed to include a retiree-benefits right in each new

8

contract if prior contracts already created lifetimeentitlements.

* * *

In sum, it is impossible to square the SixthCircuit’s decision in Reese III with this Court’s holdingin Tackett. Relying on statements from the Tackettconcurrence that the Court did not embrace, the panelrefused to follow the Court’s holding that, without clearlanguage to the contrary, a general durational clauseestablishes the termination date for an employer’sretiree healthcare benefit obligations.

II. The Circuits Are Split Over The QuestionPresented And The Sixth Circuit Is InternallyDivided.

In addition to contradicting this Court’s decision inTackett, Reese III “abrad[ed] an inter-circuit split (andan intra-circuit split) that the Supreme Court justsutured shut.” 854 F.3d at 890 (Sutton, J., dissenting).Each of these splits warrants this Court’s review.

A. There Is An Entrenched And Mature SplitAmong The Federal Courts Of Appeals.

Petitioner’s CBA includes a general durationalclause and nowhere expressly grants retirees the rightto healthcare benefits for life. “In every other circuit inthe country, that would end this case. The durationalclause would control, and the healthcare benefitswould last as long as the durational clause said theywould.” 854 F.3d at 888 (Sutton, J., concurring); see id.at 889 (same). In short, “every other court in thecountry would handle this case differently.” Id. at 893.A catalog of decisions from the First, Second, Third,Fifth, Seventh, and Eighth Circuits proves the point.Id. at 889, 893; see also Nichols v. Alcatel USA, Inc.,532 F.3d 364, 376-378 (5th Cir. 2008). Consider the

9

following cases, each of which would have come outdifferently under the rule applied in Reese III.

1. In Senn v. United Dominion Industries, Inc., 951F.2d 806, 807-811 (7th Cir. 1992), retirees claimed aright to lifetime healthcare benefits under a series offive CBAs. Plan documents accompanying the lateragreements included reservation-of-rights provisionsand language expressly limiting health benefits to theterm of the CBA. Id. at 809-810. But the earlyagreements merely stated that the employer “willcontinue” providing benefits “for retired employees,”without saying anything about when those benefitsexpired. Id. at 808-809. The district court foundambiguity in all of the CBAs and proceeded to a jurytrial over the meaning of extrinsic evidence. Id. at 811-812.

The Seventh Circuit reversed. In stark contrast tothe approach in Reese III, the Seventh Circuit“recognized the legal proposition that, in the absence ofan agreement to the contrary, a company is notobligated to continue retiree welfare benefits after theexpiration of the contract.” 951 F.2d at 814. Even inthe early CBAs, the reference to ongoing coverage forretirees was insufficient to vest lifetime rights: “[t]hecontract documents contained no language thatestablished a vested right for persons who were retiredduring the term of the agreement to enjoy welfarebenefits after the termination of the [CBA].” Id. at 815.And without an express exception for retiree benefits,the contract’s general expiration date controlled. Ibid.As the court summarized, “[t]he default rule in thisCircuit is that ‘entitlements established by collectivebargaining agreements do not survive their expirationor modification.’” Id. at 816. “Thus, it requires morethan a statement in a CBA that welfare benefits ‘willcontinue’ to create an ambiguity about vesting, for the

10

logical interpretation under our rule is that benefits‘will continue’ for the duration of the contract.” Ibid.

2. Likewise, in UAW v. Skinner Engine Co., 188F.3d 130, 134 (3d Cir. 1999), retirees sought lifetimemedical benefits under several CBAs negotiated overnearly two decades. Each contract provided that thesebenefits “will continue” and “shall remain” in thefuture, without saying when if ever the employer’sobligation to provide the benefits would end; eachagreement merely included a general durationalclause. Id. at 135-136, 141.

Like the Seventh Circuit in Senn, the Third Circuitheld that lifetime benefits had not vested. The courtrecognized that, “[b]ecause vesting of welfare planbenefits constitutes an extra-ERISA commitment, anemployer’s commitment to vest such benefits is not tobe inferred lightly and must be stated in clear andexpress language.” 188 F.3d at 139. Without suchunambiguous language, the Third Circuit concluded—in stark contrast to the Sixth Circuit here—it was“more reasonable” to view the CBAs’ generaldurational clauses as controlling, and the employer’sretiree-benefit obligations therefore ended when eachCBA expired. Id. at 141-142. The Third Circuit went onto warn against the dangers of using “extrinsicevidence in interpreting collective bargainingagreements” (id. at 146) and reiterated that “[s]ilenceon duration * * * may not be interpreted as anagreement by the company to vest retiree benefits inperpetuity.” Id. at 147.

3. More recently, the Third Circuit followed Tackettand “adhere[d] to ‘the traditional principle thatcontractual obligations will cease, in the ordinarycourse, upon termination of the bargaining agree-ment.’” Grove v. Johnson Controls, Inc., 2017 WL

11

2590762, at *3 (3d Cir. June 15, 2017) (unpublishedop.). The Third Circuit therefore held that medicalbenefits that purportedly “continue[d],” without a settermination date, expired with the CBA. Ibid. TheFourth Circuit likewise rejected claims that retireehealth benefits were guaranteed beyond the durationof the CBA. Barton v. Constellium Rolled Prods.-Ravenswood, LLC, 856 F.3d 348, 354 (4th Cir. 2017)(quoting Tackett rule that “‘when a contract is silent asto the duration of retiree benefits, a court may not inferthat the parties intended those benefits to vest forlife’”).

4. Whirlpool’s experience litigating its obligationsunder Maytag CBAs shows that a reservation-of-rightsprovision like the one in the CNH summary plandescription (supra p. 8) precludes vesting. The EighthCircuit correctly held that “[w]hen the applicable[summary plan document], ‘devoid of vesting language,explicitly reserves the right to modify the retireemedical benefit plan at any time,’ beneficiaries ‘havenot met the burden of proving vesting language,’ andextrinsic evidence may not be considered.” MaytagCorp. v. UAW, 687 F.3d 1076, 1086 (8th Cir. 2012).

5. The circuit split is lopsided, for the Sixth Circuithas struck out on its own. Nevertheless, ERISA’s broadforum-selection provision allows unions and retirees toforum shop to take advantage of the Sixth Circuit’sunique approach. Most courts, including those in theSixth Circuit, read ERISA to permit retiree healthcarevesting suits in any federal district where any retireeresides. See 29 U.S.C. §1132(e)(2); Varsic v. U.S. Dist.Ct. for the C. D. of Cal., 607 F.2d 245, 247 (9th Cir.1979); Oakley v. Remy Int’l, Inc., 2010 WL 503125, at*2-3 (M.D. Tenn. Feb. 5, 2010). For large (and manysmaller) employers, it is easy for a plaintiff to pursuelifetime benefits in the Sixth Circuit.

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This case illustrates the point. CNH soughtdeclaratory relief in Wisconsin, where it is head-quartered. But respondents filed this action inMichigan. See Reese v. CNH America LLC, 574 F.3d315, 319 (6th Cir. 2009) (Reese I). Respondents won theforum dispute and secured the right to proceed in theSixth Circuit. Id. at 320.

The plaintiffs in Whirlpool’s case, Maytag Corp.,also sought to litigate in the Sixth Circuit. The unionfiled suit in the Western District of Michigan, where itlikely would have remained had the employer notalready filed a preemptive, declaratory judgmentaction in the Southern District of Iowa. Maytag Corp.,687 F.3d at 1080-1081. So long as the Sixth Circuitmaintains its divergent vesting rule, this forumshopping will continue.

6. Finally, the circuit split poses particularproblems for national companies like Whirlpool, whichface “a patchwork of different interpretations of a[single] plan” and therefore suffer from “considerableinefficiencies in benefit program operation.” Conkrightv. Frommert, 559 U.S. 506, 517 (2010). For thesecompanies, inconsistent construction of the same planposes monumental administrative burdens.

B. The Sixth Circuit Is Internally Divided,Without The Usual Remedy Of En BancReview.

Reese III is not only at odds with established law inother circuits, but it also represents one side of anirreconcilable split within the Sixth Circuit itself. SeeInyo Cty. v. Paiute-Shoshone Indians, 538 U.S. 701,709 n.5 (2003) (certiorari granted to consider issue onwhich Ninth Circuit “expressed divergent views”);Dickinson v. Petroleum Conversion Corp., 338 U.S. 507,508 (1950) (observing that Court granted certiorari

13

“[b]ecause of this intracircuit conflict”). That the SixthCircuit is deeply divided over the legal standard toapply in deciding whether retiree medical benefitshave vested, and has been unable to resolve thatdivision through en banc review, provides anadditional reason for a grant of certiorari. SeeSUPREME COURT PRACTICE 255 (10th ed. 2013); U.S.Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18,27 (1994) (“The value of additional intra-circuit debateseems to us far outweighed by the benefits that flow tolitigants and the public from the resolution of legalquestions”).

1. By contrast to Reese III, two Sixth Circuitdecisions have followed Tackett’s rule that a CBA’sgeneral durational clause controls unless the contractincludes language granting a right to vested retireebenefits. In Gallo v. Moen Inc., 813 F.3d 265, 267 (6thCir. 2016), the court in an opinion by Judge Suttonrejected plaintiffs’ claim to lifetime benefits, notwith-standing language in the CBAs guaranteeing“[c]ontinued” healthcare for retirees. As the courtexplained, “we should not expect to find lifetimecommitments in time-limited agreements.” Id. at 269.Accordingly, “[w]hen a specific provision of the CBAdoes not include an end date, we refer to the generaldurational clause to determine that provision’stermination.” Ibid. The three-year durational clause inGallo meant the parties were “entitled to infer that anyright to the benefit ends after three years.” Id. at 274.

Judge Stranch dissented. Like the majority inReese III, she would have found the contractambiguous—despite the CBAs’ general durationalclause—and would have used extrinsic evidence toinfer a right to lifetime benefits. Id. at 275.

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Cole v. Meritor, Inc., 855 F.3d 695 (6th Cir. 2017),issued the same day as Reese III, followed Gallo.Because the CBAs in Cole “included a generaldurational clause that terminated the agreement afterthree years” without any language “provid[ing] aspecific expiration date for [healthcare] benefits,” theemployer’s duty to furnish benefits ended after threeyears. Id. at 700. Judge White wrote separately to voicedisagreement with the decision in Gallo, which shedescribed as “install[ing] duration clauses as the newabsolute determiner of intent.” Id. at 702. Like themajority in Reese III, Judge White “would have foundthe CBA in [Gallo] ambiguous and its interpretationsubject to parol evidence.” Ibid. Unable to distinguishGallo from Cole, however, she “reluctantlyconcur[red].” Ibid.

2. Also decided the same day as Reese III and Colewas UAW v. Kelsey-Hayes Co., 854 F.3d 862 (6th Cir.2017), another divided panel opinion. This time,however, the majority was in step with the majority inReese III and in conflict with Gallo and Cole. As inGallo and Cole, the CBA in Kelsey-Hayes includedstandard prospective language—“that health care‘shall be continued’ without specifying for how long”—and a “general-durational clause.” Id. at 868. As inReese III, however, the majority in Kelsey-Hayes foundthe contract ambiguous. “Absent is explicit languagethat the benefits at issue vest for life,” the courtreasoned, “but also absent is a clear indication thatthey do not.” Id. at 872. Accordingly, the Kelsey-Hayesmajority sorted through a “mountain of extrinsicevidence” and (as in Reese III) used this evidence toinfer that retirees were entitled to lifetime healthbenefits. Id. at 869-871.

Judge Gilman dissented. He would have followed“Gallo’s holding that we should not infer lifetime

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benefits when, absent a specific carve-out, there is ageneral durational clause in the CBA.” 854 F.3d at 875-876. As Judge Gilman explained, “Gallo appliedordinary contract principles to the CBA before it toconclude that the healthcare benefits were unambig-uously not vested for life. Because the facts of this caseare materially indistinguishable, I see no way to avoidarriving at the same conclusion.” Id. at 876.

3. Parties sought en banc rehearing in Cole, ReeseIII, and Kelsey-Hayes, but the court denied rehearingin each. Four judges wrote separately in connectionwith the order denying rehearing in Kelsey-Hayes, andthose opinions further demonstrate how deeply andirreparably divided the circuit is with regard to vestingprinciples.

Judge Sutton, concurring in the denial, recognizedthat “[b]y nearly every measure, this case deserves enbanc review,” for “[d]istinct perspectives on the lifetimevesting of healthcare benefits in time-limited collectivebargaining agreements led us to release three opinionson the same day that face in different directions.” UAWv. Kelsey-Hayes Co., 872 F.3d 388, 389 (6th Cir. 2017).“[S]ome of those decisions are inconsistent with[Tackett],” he continued, “and some of them contrastwith the approach our sister circuits have taken on thesame issue.” Id. at 390. But the Sixth Circuit is in noposition to resolve this intra-circuit split, he explained.“With 16 judges on the en banc court, there is a realpossibility that we would not have nine votes for anyone of” the courts’ multiple “approaches” to vesting.Ibid.

Judge Griffin, joined by Judge Gilman, would havegranted en banc review. Like Judge Sutton, thesejudges acknowledged that the Sixth Circuit’s vesting“decisions are in irreconcilable conflict regarding how

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courts are to view durational clauses,” and circuit “lawis one of contradiction and confusion in an area of thelaw that demands consistency and clarity.” Id. at 391-392. Quite simply, “[o]ur post-Tackett case law is amess,” for “Gallo, Cole, Reese, and Kelsey-Hayes cannotall be correct.” Id. at 390, 392. Judge Gibbons, bycontrast—who wrote the majority opinions in Kelsey-Hayes and Reese III—thought en banc review wasunnecessary because “factual differences between thecases determined the outcomes.” Id. at 388.

The Sixth Circuit is irreconcilably divided over aquestion of law—whether a contract’s generaldurational clause controls absent a stated intention inthe contract to vest retiree healthcare benefits for life.See also Serafino v. City of Hamtramck, 2017 WL3833206, at *6-8 (6th Cir. Sept. 1, 2017) (relying ongeneral durational clauses to hold that retireehealthcare benefits had not vested). Indeed, JudgeGibbons’ statement that each of the Sixth Circuit’svesting cases turns on its facts betrays the court’sconflicting legal positions. The rule of law applied inGallo and Cole does not assign any weight to the“factual differences” to which Judge Gibbons refers.Rather, it follows the predictable, straightforward rulethat, “[w]hen a specific provision of the CBA does notinclude an end date, we refer to the general durationalclause to determine that provision’s termination.”Gallo, 813 F.3d at 269.

In short, the Sixth Circuit has and will remain thepreferred venue for unions and retirees seeking to infera right to lifetime healthcare benefits from CBAs thatare silent on the subject. That court is hopelesslydivided internally over the issue, and squarely at oddswith other courts of appeals that apply Tackett.

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III. This Case Presents An Issue Of ExceptionalImportance.

1. The legal standard Reese III applied createsunpredictability, complexity, and enormous cost byabandoning Tackett’s reliance on written plandocuments and established principles of contractinterpretation.

It is a “core” requirement of ERISA that “[e]veryemployee benefit plan shall be established andmaintained pursuant to a written instrument.”Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83(1995) (quoting 29 U.S.C. §1102(a)(1)). Accordingly,“the rule that contractual ‘provisions ordinarily shouldbe enforced as written is especially appropriate whenenforcing an ERISA [welfare benefits] plan.’” Tackett,135 S.Ct. at 933 (alterations in original). This “‘focuson the written terms of the plan is the linchpin of’”ERISA, for it ensures that the “‘system * * * is not socomplex that administrative costs, or litigationexpenses, unduly discourage employers from offering[welfare benefits] plans in the first place.’” Ibid.(alterations in original). By “assuring a predictable setof liabilities,” ERISA aims to “induc[e] employers tooffer benefits.” Conkright v. Frommert, 559 U.S. 506,517 (2010).

Reese III topples this incentive structure. CBAsconferring retiree healthcare benefits necessarily useprospective language to describe benefits, and thereasoning of the panel below would permit courts tofind ambiguity and resort to extrinsic evidence in mostcases. “Predictability as to the extent of future obliga-tions would be lost.” Moore v. Metro. Life Ins. Co., 856F.2d 488, 492 (2d Cir. 1988).

Massive and protracted litigation inevitably willfollow, adding to “a tsunami of retiree medical

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litigation” that already “has crashed over the dockets ofour nation’s federal courts,” imposing severe burdenson employers and the judicial system. http://www.jonesday.com/retiree-medical-litigations-dirty-little-secret-location-location-location-08-04-2009 (catalog-ing plaintiffs’ rush to the Sixth Circuit under Yard-Man).

Unions and retirees who failed to obtain a writtenright to vested benefits through collective bargainingcould come to court years or even decades later,claiming that hand-picked selections from a vastuniverse of extrinsic evidence implied a right tolifetime coverage. Using such evidence to impose anextraordinary financial obligation on the employer—one that the unions and employees could not obtainthrough collective bargaining—runs afoul of federallabor laws, which prohibit end-runs around thebargaining process. See Chi. & N.W. Ry. Co. v. UnitedTransp. Union, 402 U.S. 570, 581-583 (1971)(describing purpose of Norris-LaGuardia Act).

Worse, such litigation is unpredictable. This caseillustrates the point. Without any express promise oflifetime healthcare benefits—and in the teeth of ageneral durational clause and reservation-of-rightslanguage—the panel inferred a right to lifetimecoverage. It based this finding on just two strands ofextrinsic evidence, 854 F.3d at 883, neither of whichsuggests that CNH intended to commit itself to lifetimebenefits. See id. at 892-893 (Sutton, J., dissenting).

Litigation under the Reese III approach, involvingyears’ or even decades’ worth of extrinsic evidence, isalso extraordinarily time-consuming and expensiveand imposes severe burdens on federal district courts.CNH has been litigating Reese for 13 years. The case isnow on its third appeal and headed back for additional

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proceedings on remand. Meanwhile, Whirlpool’svesting litigation in the Northern District of Ohio hastaken six years to reach judgment, following a series ofconflicting interim decisions, with appellate review andpotentially more litigation to come.

Such protracted, costly litigation, culminating inunpredictable results based on selections from a“mountain of extrinsic evidence,” Kelsey-Hayes, 854F.3d at 869, eviscerates the incentives that ERISAaims to create. It produces “substantial disincentivesfor even offering [benefit] plans,” Moore, 856 F.2d at492, accelerating the already pronounced erosion ofthese programs nationally. See Tricia Neuman &Anthony Damico, Fading Fast: Fewer Seniors HaveRetiree Health Insurance (May 15, 2016) (43% drop inlarge employers offering retiree health coverage since1988), https://www.kff.org/medicare/issue-brief/fading-fast-fewer-seniors-have-retiree-health-insurance.

2. Reese III undercuts ERISA’s effort to affordemployers special flexibility in providing healthcarebenefits. Unlike pensions, which vest automatically,employers “are generally free under ERISA, for anyreason at any time, to adopt, modify, or terminatewelfare plans.” Tackett, 135 S.Ct. at 933.

This flexibility serves important federal policies.“[M]edical insurance must take account of inflation,changes in medical practice and technology, andincreases in the costs of treatment independent ofinflation. These unstable variables prevent accuratepredictions of future needs and costs.” Moore, 856 F.2dat 492. It is no surprise, therefore, that most people—including those covered by Medicare and Medicaid—are subject to changes to their health plans andpremiums. See, e.g., Nat’l Fed’n of Indep. Bus. v.Sebelius, 567 U.S. 519, 582-583 (2012) (describing

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Congress’ need to change terms of federal medicalbenefit programs). Likewise, in ERISA, “Congressrecognized that ‘requir[ing] the vesting of theseancillary benefits would seriously complicate theadministration and increase the cost of plans.’” Inter-Modal Rail Employees Ass’n v. Atchison, Topeka &Santa Fe Ry. Co., 520 U.S. 510, 515 (1997); see alsoMoore, 856 F.2d at 492 (“Automatic vesting wasrejected because the costs of such plans are subject tofluctuating and unpredictable variables”). “Givingemployers this flexibility also encourages them to offermore generous benefits at the outset, since they arefree to reduce benefits should economic conditionssour.” Ibid.

By locking employers into high-cost, inefficientretiree medical plans that have fallen out of step withthe nation’s health delivery system, Reese III hobblesemployers. Midwest manufacturers with employees inthe Sixth Circuit, already under heavy pressure toremain competitive, have been forced to take onadditional, massive liabilities. See UAW v. Gen. MotorsCorp., 497 F.3d 615, 632 (6th Cir. 2007) (acknow-ledging that vested medical benefits threatened GM’s“financial position”).

Massive unfunded healthcare benefits are out oftune with changes in the provision of healthcare.Rising medical costs have driven large employers intobankruptcy.2 Bankruptcy wipes out benefits and

2 E.g., Now for the Reckoning, THE ECONOMIST (Oct. 13, 2005)(Delphi bankruptcy driven by pension and welfare benefit costs),http://www.economist.com/node/5017138# print; Steve Miller, FullText of Remarks by Delphi’s Steve Miller, FINANCIAL TIMES (Oct.10, 2005), https://www.ft.com/content/72f2db2c-39a5-11da-806e-00000e2511c8 (GM had $80 billion “of accrued retiree health careobligations” and was financially unable to wait until current laborcontracts expired to reduce this obligation). See also Alan

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eliminates jobs.3 And funding legacy welfare benefitsdiverts investment from new plants and requiressevere cost-cutting measures. Ultimately, therefore,employees and retirees bear the burden. See PhillipModerson, Following a Dangerous Precedent: TheCalifornia Rule and the Kansas Pension Crisis, 64 U.KAN. L. REV. 1113, 1116 (2016) (a permissive vestingrule “harms the state employees the rule seeks toprotect”). To remain viable, large employers threatenedby judicially vested healthcare obligations will need toshrink the size of their work force, offer fewer or nohealthcare benefits, or both. So “while [particular]plaintiffs” may be “helped by a decision in their favor,”such a ruling would “decrease protection for futureemployees and retirees.” Moore, 856 F.2d at 492.

Local governments too face crushing retiree health-care costs that they need to reduce to stay solvent andbe able to continue to provide services to residents.4 Arecent Michigan Task Force report prepared at therequest of Governor Snyder documented that some 330Michigan municipalities and counties have $10 billionin unfunded retiree healthcare benefit obligations, only$3 billion in assets to cover that liability, and anannual shortfall in contributions of $300 million which

Reuther, By Saving Billions in Retiree Health & Pension Benefits,Auto Bailouts Were an Even Bigger Success Than Acknowledged,Economic Policy Institute (Mar. 12, 2015), http://www.epi.org/blog/by-saving-billions-in-retiree-health-and-pension-benefits-auto-bailouts-were-an-even-bigger-success-than-acknowledged.

3 Delphi, for example, had to “cut thousands of workers” beforeemerging from bankruptcy. Chris Isidore, Delphi Actions CouldBankrupt GM, CNNMoney.com (Mar. 31, 2006), http://money.cnn.com/2006/03/31/news/companies/delhi/.

4 E.g., Flint Manager Warns of Bankruptcy Over Retiree Costs,Bloomberg News (July 17, 2014), http://www.crainsdetroit.com/print/593941.

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means these unfunded obligations continue to grow.Responsible Retirement Reform for Local GovernmentTask Force, Report of Findings and Recommendationsfor Action 8, 12 (July 2017), http://www.michigan.gov/documents/snyder/R3_Task_Force_Report_579101_7.pdf. Those figures do not include the $6 billion inunfunded retiree healthcare benefits that Detroiteliminated through bankruptcy. Id. at 12 n.7.

Michigan local governments’ already difficultstruggle to restructure these liabilities is compoundedby the Sixth Circuit’s decisions imposing lifetimeobligations that were never promised. See, e.g.,Kendzierski v. Macomb Cty., 901 N.W.2d 111 (Mich. Ct.App. 2017) (finding “ambiguous” CBA vested Countyretirees with unmodifiable lifetime healthcare benefits;striking down changes that had saved County $26million); Harper Woods Retirees Ass’n v. City of HarperWoods, 879 N.W.2d 897 (Mich. Ct. App. 2015)(reversing summary judgment for City on retireehealthcare vesting claims challenging increase in co-pays, deductibles, and prescription costs).

* * *

Reese III conflicts squarely with this Court’sdecision in Tackett and deepens inter- and intra-circuitsplits that encourage forum shopping. It threatenssevere adverse consequences for employers andemployees alike.

CONCLUSION

This Court should grant the petition for certiorari.

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Respectfully submitted.

STEPHEN M. SHAPIRO

Counsel of RecordTIMOTHY S. BISHOP

JOSHUA D. YOUNT

MICHAEL A. SCODRO

Mayer Brown LLP71 South Wacker DriveChicago, Illinois 60606(312) 782-0600

sshapiro@mayerbrown.com

Counsel for Amicus Curiae

NOVEMBER 2017